How to Fix Healthcare: First Gradually, Then Suddenly

Philip Betbeze, August 15, 2014

We're in the "gradually" phase right now. The "suddenly" part will be upon us before we know it.


Imagine you built a lemonade stand at which you could sell all the lemonade you could make for a dollar a cup. Wouldn't you do everything you could to produce as absolutely many cups of lemonade as possible?

If you were economically rational, you would. There would theoretically be no limit to your revenue, and by selling each cup of lemonade you simply add to your profit ad infinitum. While the way healthcare is bought and paid for is infinitely more complex than how lemonade is sold, for years, it has operated on a very similar economic model to my theoretical lemonade stand. (Sometimes you have to give the lemonade away for free, for example.)

Economic theory holds little sway in such a business, which is one reason why healthcare is on a crash course to try to inject the right incentives and measures into how decisions are made about healthcare services for individuals.

Now things are changing, but fee-for-service is still the dominant pay mechanism for health plans, government payers, and hospitals and health systems to this day. Many geographical regions seem to have plenty of pilot-type projects going on, but relatively few have gone further, at least up to now.

Philip Betbeze

Philip Betbeze is the senior leadership editor at HealthLeaders Media.


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